Apache, Kayne Anderson form $3.5 billion Permian basin pipeline firm

(Reuters) – U.S. oil producer Apache Corp will contribute some of its oil and gas pipeline assets to its joint venture with investment firm Kayne Anderson to create a pipeline company in the prolific Permian basin in Texas.

Apache will own 71.1 percent of the new company, Altus Midstream Co, which will have a market value of $3.5 billion.

Kayne Anderson Acquisition Corp will contribute $952 million in cash.

Brian Freed, the senior vice president of Apache’s midstream and marketing division, will serve as Altus’s CEO.

Altus expects to have more than $900 million in cash and no debt when the deal closes, Freed said in a statement. The company is projected to be free-cash-flow positive by 2021, he added.

Altus will operate Apache’s oil and gas pipelines at the Alpine High shale play in West Texas, and have options to buy shares in five planned pipeline projects from the Permian Basin to the Texas Gulf Coast.